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Do you need to include the cashed out portion of annual leave in an employee's ordinary time earnings for the purpose of calculating superannuation guarantee contributions?

In August 2016, the Fair Work Commission decided to vary Modern Awards to provide the opportunity for employees to cash out “excessive” accrued annual leave. The decision affects real estate employees covered by the Real Estate Industry Award 2010 or the Clerks – Private Sector Award 2010.

For a variety of reasons, the cashing out concept is growing in popularity. But there is some confusion about the impact of cashing out annual leave on superannuation guarantee contributions.

SGC Ruling 2009/2 states that “lump sum arrears payments of unused leave or salary or wages otherwise than on termination of employment are also ordinary time earnings”. So yes, you do need to include the cashed out portion of annual leave in an employee’s ordinary time earnings for the purpose of calculating superannuation guarantee contributions.

This is compared to the situation where the payment of unused leave on termination is excluded from the definition of ordinary time earnings for superannuation guarantee contribution purposes.

Related

In an important decision by the Fair Work Commission, annual leave provisions in modern awards have been varied to provide greater administrative flexibility. The changes apply from the first pay period on or after 29 July 2016.

It’s not uncommon for an employee to ask for a few hours off to visit their GP or attend a specialist medical appointment. They’re not sick, but there’s something they need attended to. Are they entitled to personal/carer’s leave?

It's a common question. REEF often receives calls asking about an employee's ability to cash out an amount of accrued long service leave. But can they? Senior Workplace Relations Advisor Laura Clark explains.

It’s an issue all too well known to real estate employers. You have a pregnant employee who is about to head off on unpaid parental leave. Your anxiety levels start to rise. How are you going to maintain your agency’s level of service while they’re gone?